Our Ag Policy Outlook for 2014

Our Ag Policy Outlook for 2014

Partisan politics could deepen further in an election year

This year proved to be full of political impasses. As the calendar turns to 2014, you can expect more of the same or worse, as partisan politics deepens in an election year.

Congressional members must calculate the cost of passing the right policy, versus trying to placate the extremes of their parties. In turn, the environment for meaningful policy advancements in 2014 could be an uphill battle, sources project.

AT WORK? The year ahead will have plenty of ag-related issues on the agenda in Washington.

Carl Zulauf, agricultural economist at Ohio State University, says the next Presidential election cycle is already in play. "It is also important to keep in mind that we do not yet have a good reading on what the long-term political consequences are of the government shutdown," he adds. "If there are long-term consequences, then they will play an increasing role in 2014 and beyond."

Here's a look at some top-of-mind issues for those in the agricultural industry.

Farm bill

For the past three years the farm bill has been a priority for agricultural groups. With negotiations officially underway between the House and Senate in a conference committee, insiders remain hopeful a deal can make its way to the President's desk yet this year.

If indeed a multi-year "real" farm bill is enacted by the end of the year rather than another extension, implementation will be the issue in 2014, explains Pat Westhoff, director of the Food and Agricultural Policy Research Institute at the University of Missouri.

Carl Zulauf, Ag economist at Ohio State University, says the next Presidential election cycle is already in play.

"Most of the new Title 1 programs could probably be implemented, although I might change my mind if a final bill involves lots of producers' choices that need to be made by planting time next year," Westhoff says. "It's hard to see how new crop insurance programs (SCO, STAX) could possibly be up and running before 2015."

This could create some issues with transition. For instance, if you do not have a cotton program for a year does that mean a one or two year extension of direct payments?

Dale Moore, executive director of public policy at the American Farm Bureau Federation, says he is "hopeful and confident the farm bill will get done this year." And if it does, it'll actually be a head start compared to the last couple of farm bills that have been passed in spring or summer. He expects a handful of proverbial interim final rules to give producers something to work with on planning implementation, and a little bit of breathing room for USDA to fine tune as they go along.

Immigration

One issue that seemed to be gaining steam at the beginning of 2013 was the chance of a massive overhaul for immigration reform, something of monumental importance to agriculture.

The Senate passed a comprehensive bill over the summer and instead of the House wanting to take up its own big package, leaders have sought to do a more piecemeal approach. Moore says this creates a bit more of a complicated process as one component missing from one bill needs to be part of another. The result is a "chutes and ladders" process which in the end will need leadership to determine which piece goes to the floor to pull all the other ones through the process. 

Moore says in the next two to four months it will be important for supporters to step back and reexamine the strategy to keep pressure built up. The goal for 2014 will be to get on the legislative calendar whether its February, March or even later spring, just as long as it's part of the legislative landscape for next year.

From an agricultural standpoint, the progress made is "pretty amazing" compared to the last couple of efforts on immigration reform, Moore adds.

Craig Regelbrugge, co-chair of the Agriculture Coalition for Immigration Reform and vice president of government relations at American Nursery & Landscape Assn., says while legislation languishes, the situation on the ground is getting worse, not better. 

"Labor shortages are being reported, federal enforcement continues to cause havoc, and the H-2A program is a mess," he warns.

RFS

The Environmental Protection Agency just released its 2014 levels for the Renewable Fuels Standard. Since it moved forward with significantly lower RFS mandates, needed action on changing the RFS may become less urgent, although those opposed (including livestock groups) continue to say a permanent fix is needed.

The petroleum industry may sue the agency because the numbers will not be finalized until sometime in the first quarter of 2014, yet the industry is supposed to comply with RFS immediately upon EPA final action - a point well into the new production year. The Renewable Fuels Association on the other hand contends the EPA doesn't have the statutory authority to lower the total requirement by more than the total reduction in advanced and cellulosic levels, because severe or economic harm or inadequate domestic supply of renewable fuel is not present.

The National Corn Growers Association says the psychological impact of EPA's proposal to lower mandates is expected to push corn prices well below the cost of production. And this could in turn change how final farm bill negotiations turn out as commodity title discussions center on whether to provide support based on target prices or production costs.

CFTC

Amongst the farm bill mess this year, both the House and Senate Agriculture Committees have held a handful of hearings on issues related to Dodd-Frank and the Commodities Futures Trading Commission (CFTC). The Commodity Exchange Act authorization expired on Sept. 30, 2013 and the question remains whether the Ag committees, particularly in the Senate, want to tackle issues like amendments to Dodd-Frank as part of CEA reauthorization, says Jared Hill, National Grain and Feed Association director of legislative affairs. 

CFTC reauthorization is something Moore says is on their "A list" of policy items to watch, if for no other reason as a political vehicle to fine tune some of the concerns stemming from Dodd-Frank implementation. However, those also could be driven by politics, rather than policy.

The committees can offer a one-line authorization for the agency, but that seems unlikely considering the outstanding issues identified through the hearing process, including margin requirements. Another issue that has moved to the forefront is addressing residual interest rulemaking, which the CFTC moved ahead with at the Oct. 30 vote, despite concerns raised by farmers and agribusinesses.  

EPA regulations

EPA continues to be closely watched by those in the agricultural community from overreaching regulations and Clean Water Act interpretations. In 2014 it is expected EPA will make a decision on what constitutes a navigable water.

Zulauf says he thinks water and air pollution regulation could be a key issue for the rest of the current Administration. "I think they will try to use administrative rulemaking to advance their positions," he says, which is common among second term administrations.

Westhoff expects if there were major new regulations opposed by the Ag community, there likely would be efforts to overturn them. However, given partisan divisions, he's unsure how successful such attempts would be.

The most likely strategy would be to attach conditions to an appropriations bill or some other must-pass legislation. This has been the process for the Ag industry's attempt to clarify EPA's Spill Prevention, Control and Countermeasure (SPCC) program for oil tank storage on farms. Language was contained in the House Farm Bill and as an amendment to the Senate's Water Resources Development Act (WRDA).

Trade

After years of inactivity on the trade negotiating front, 2014 could be telling in whether export markets can be expanded through multilateral trade agreements.

The Trans-Pacific Partnership (TPP) potential is huge in terms of market access, bringing together advanced and emerging economies that make up a third of global trade and 40% of global gross domestic product.

On the other side, the Transatlantic Trade and Investment Partnership with the European Union offers another significant platform for increasing trade. And the World Trade Organization plans to meet at the beginning of December with the goal of resurrecting stalled world trade talks.

Moore says so far agriculture is "holding out hope, but not expecting any miracles" on the trade front. Negotiators continue to say TPP could be completed by the end of the year, but practically speaking he doesn't see it happening.

Trade Promotion Authority, which allows Congress to give just an up or down vote on a negotiated trade agreement, has been touted by the President and Congressional members on both sides of the aisle as needed. However, legislation hasn't been introduced and may not until trade deals near completion.

In a recent hearing National Chicken Council senior vice president Bill Roenigk testified that if TPA was "given to our negotiators now, it would strengthen their hands, rather than be more susceptible at the negotiating table."

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